Movement on the government’s plan to ban non-compete clauses for employees at or below the high-income threshold ($190,100 for the 2026-27 period) could come as early as January 2027.
This has been coming for some time, but employers still don’t have a definitive answer on when it will be implemented.
But after the government released its exposure draft legislation in September, experts suggest the law could commence on 1 January, 1 April, 1 July or 1 October 2027 following Royal Assent.
Competition law already prohibits businesses from colluding on prices. The draft legislation would extend that thinking to the labour market, so agreements between employers to suppress wages or avoid hiring each other’s people would be treated as cartels.
It would also make three changes to employment contracts:
1. Non-competes banned for most employees. Employees earning at or below the Fair Work Act high-income threshold (currently $190,100 a year) would have a right to be free of non-compete clauses.
2. Co-worker non-solicitation banned. Clauses restraining former employees from soliciting colleagues would be prohibited, regardless of the employee’s income.
3. Serious consequences for breaches. Non-compliance would attract significant penalties (the maximum for an individual would be 600 penalty units for a serious contravention and 60 penalty units for any other contraventions; for a body corporate, according to the existing FW Act penalty framework, the penalties would be five times those amounts).
IF YOU ARE CONCERNED ABOUT YOUR BUSINESS EMPLOYMENT CONTRACTS, PARTICULARLY THE NON-POACHING OF CLIENTS, CUSTOMERS, SUPPLIERS, AND STAFF.
CONTACT JOHN MORRISSEY (0407 069 507) TO DISCUSS YOUR BUSINESS HR ISSUES.
